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Tax Notes

The Treasury Department and
the IRS proposed regulations in March that
would allow—within certain
limitations—employers to streamline their
retirement plan distribution options (
www.treas.gov/press ). Under the
regulations companies could eliminate
early retirement entitlements,
retirement-type subsidies and optional
benefits that significantly burden plan
administrators or participants with
complexities if the changes would not have
a significant adverse effect on the rights
of any participant. Comments are due June
22.

In April the Treasury
Department and the IRS issued guidance
on two kinds of abusive tax-avoidance
transactions. One type improperly shifts
taxes from S-corporation shareholders to
exempt parties such as charities. IRS
notice 2004-30 (
www.treas.gov/press/releases/reports/js1292notice200430.pdf
) states the service’s intent to
challenge what it considers “listed
transactions” and requires participants
to disclose any involvement in them when
filing their tax returns. Another class
of abusive transactions entails
corporations’ use of partnerships to
obtain inappropriate deductions for
interest payments to related entities.
IRS notice 2004-31 ( www.treas.gov/press/releases/reports/notice_200431.pdf
) stipulates that participants must
disclose to the IRS their involvement in
such transactions and that promoters
must register the transactions with the
service and use IRS Form 8886,
Reportable Transaction Disclosure
Statement, to identify all
participants in them. The IRS will amend
the form to help with this disclosure.

The IRS in February began
accepting electronic income tax and
information returns from corporations
and tax-exempt organizations,
significantly reducing the time it takes
to file forms 1120 and 990 (
www.irs.gov/newsroom/article/0,,id=121573,00.html
). Tax professionals—using
IRS-approved software ( www.irs.gov/efile/lists/0,,id=119096,00.html
)—now can submit such returns to the
service through a secure Web site
accessible only to registered users. The
system employs an industry-standard
extensible markup language (XML) process
that makes it possible to append
portable document format (PDF)
attachments to returns, generates
easy-to-understand error messages and
sends users an electronic
acknowledgement that the IRS has
received the return and is processing
it. To use the system, tax professionals
first must register at https://la.www4.irs.gov/e-services/Registration/index.htm
. Those who already submit other
returns electronically can update their
applications to include online
submission of forms 1120 and 990.

The results of the 2016 presidential election are likely to have a big impact on federal tax policy in the coming years. Eddie Adkins, CPA, a partner in the Washington National Tax Office at Grant Thornton, discusses what parts of the ACA might survive the repeal of most of the law.